Zhengzhou in Henan province is a typical Chinese city: skyline defined by largely similar block-shaped buildings, wide thoroughfares cutting through an urban area with high population density, and LED lights brightening the night sky.
As its urban landscape resembles that of many other cities in China, Zhengzhou’s fitful economic recovery from the country’s three years of effective isolation from the rest of world offers a grim glimpse into China’s daunting challenge of thrusting the country back to the status of global economic powerhouse.
Much like the rest of the country, the city's 10 million people were hit hard by the first wave of Covid in early 2020, with incalculable casualties. The high death toll sparked China’s stringent zero-Covid policy, which kept residents indoors for much of the pandemic under lockdown.
Now, as China reopens, Zhengzhou’s economic trajectory is anything but clear.
Young people are fleeing the city, businesses are haunted by diminutive profits. The real estate industry ― once one of China’s fastest growing sectors ― is imploding as developers fail to deliver apartment blocks due to fiscal issues and buyers refuse to repay loans for houses they suspect will never be delivered.
“Many of my friends have left Zhengzhou, and I am probably leaving after I graduate, too,” said Jun Xiang, 24, a graduate student. “There are no jobs, and everyone is complaining that it’s difficult to get money into our pockets now.”
Zhengzhou’s story highlights the general pessimistic attitude many are exhibiting as China prepares to embark on a bumpy recovery.
China is emerging from this painfully disruptive pandemic in worse shape than it has been in decades. In 2022, the world’s most populous country recorded its first population contraction in more than six decades; its economy, the second largest in the world, posted a mere 3 per cent growth in 2022, compared with the double-digit growth at its peak; and the country’s powerful yet reticent leader, Xi Jinping, has also led campaigns to stoke nationalism and created an unwelcoming political environment for foreign businesses.
The Covid pandemic has taken a special toll on China ― the country that witnessed the first documented case of the then-mysterious virus was also the last to effectively exit the pandemic. That came about, during protests on the streets, only late last year,
What is likely to follow this abrupt about-face is China’s aggressive plan to grow its economy and resume its connection with the world, experts said.
“You can’t go any worse than we have seen in the past couple of years,” said Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations. After a particularly bad year, China’s economic rebound will again send seismic waves to the global economy and will probably be the biggest economic event of 2023.
However, the public remains on the fence. A quick sampling of businesses across China shows the economic confidence is still shuddering. The fundamental changes that slowed the economy during the past three years are not likely to disappear, according to analysts.
“[The Chinese government] probably underestimated the devastating impact of the pandemic response in the past three years,” Mr Huang said. “That could mean that the future economic growth will no longer be as robust as before.”
It is difficult to accurately predict China’s economic trajectory, but it is not rosy, according to Yale Law School’s Taisu Zhang.
“The economy will grow more than 5 per cent year on year,” Prof Zhang predicted. “But none of the underlying structural problems [demographics, housing bubble, local government debt, relatively low consumption] will significantly improve.”
Behind these structural problems is a bigger theme that defines present-day China’s policies: a powerful government that is growingly intolerant to dissenting opinions. This, according to experts, will eventually drive foreign businesses away.
A number of major corporations are looking to move the supply chain out of China, and some of them are at least trying to diversify the chain to absorb the uncertainty of the Chinese manufacturing status.
“It’s a matter of whether they can still trust the government that they can do business in the country and make a profit as they did before,” Mr Huang said. “It might be difficult to move the supply chain entirely out of the country, but it’s a lack of better choice instead of wanting to stay there.”
More worrisome in the long run for the country, China’s enormous workforce that helped to build the country’s mighty economic empire is showing signs of weakening as its population grows older and smaller.
Years of unforgiving pandemic control measures have left many young people with no will to have children. “We are the last generation,” one man from Shanghai famously responded to the police when asked to be transported for central quarantine. Such sentiment is widely shared as the pockets of China’s population grow thinner.
Jun Xiang is one of those who have decided that she will not have children. “In this environment where many people are losing jobs and no one is able to afford to live a decent life himself, why would we want to have children?”